Fosun acquired One Chase Manhattan Plaza in New York for $725 million
Investment in Manhattan office properties reached US$5.5 billion in 2013, with an influx of Chinese investors helping drive the market to a record high, according to a recent market study.
The report from international property consultancy Colliers International found that mega-transactions, such as Shanghai-based investment group Fosun acquiring the 60-story, One Chase Manhattan Plaza for $725 million, and Soho China CEO Zhang Xin leading a group that purchased a $700 million stake in the GM Building, helped drive the new levels of investment.
“These investors have been kicking the tires here (in Manhattan) for some time but they have finally educated themselves enough on the market to feel comfortable here and their participation has pushed the market to a record level,” James Murphy, who was one of the authors of the report, said in a statement.
Foreign Buyers Grab a Bigger Chunk of New York
In total, overseas investors bought $5.5 billion worth of office towers in Manhattan in 2013, according to the report. Aside from the One Chase Manhattan Plaza and General Motors Building sales to Chinese buyers, the other headline deal of the year was Montreal-based Ivanhoe Cambridge Inc. together with a partner purchasing a 49% stake in 1211 Avenue of the Americas for a reported $857.5 million.
Not only did 2013 set a new record for foreign investment in Manhattan commercial real estate, but the deal volume also established a new high for such spending as a proportion of total investment in the sector. Last year foreigners accounted for 28% of the $20 billion worth of office property deals done in Manhattan.
The total dollar figure was nearly twice as much as the previous record, set in 2007 when foreign buyers pour $3 billion into the Manhattan, according to Colliers.
New York’s Stability and Deal Size Attractive
Murphy explained that Manhattan has long been a target for deep-pocketed buyers because of the city’s track record for delivering steady gains in the office property market over time, and because the high asset values allow wealthy buyers to invest more cash with fewer transactions.
“There are few places for investors to place large amounts of money into commercial real estate as efficiently as Manhattan,” Murphy said.
Coming in second and third behind China for the highest levels of investment were Canada and the United Arab Emirates, respectively.
China Outbound Investment Trend to Continue in 2014
Just last week, Shenzhen-based developer, China Vanke broke ground on a 61-storey residential project in the city’s midtown area, and more China sourced deals are expected to follow.
Mr. Murphy predicted that foreign investment will remain strong in 2014, noting, “We expect it to continue at the same level as last year or potentially even higher.”
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